Buying, selling and letting - August, 2006

With prices still rising, getting on to the ladder is tough. But there are still some great new homes right for the property novice, finds Johnny Turner

First-time buyer Victoria Bemrose is settling into her dream home thanks to a scheme designed to help young people gain that all important first foothold on the property ladder.

Victoria, 23, is revelling in a new found domestic bliss after snapping up a two-bedroom apartment at Waterford Gate, Fairford Leys, in Aylesbury. Waterford Gate is a development of one, two and three-bedroom apartments designed to appeal to those seeking a slice of stylish ‘urban village’ living within easy reach of Aylesbury and London.

Taking advantage of Bellway’s offer to pay the 5% deposit on her £175,000 apartment enabled Victoria to spend the money she had started to save towards a deposit on furniture and bills. It also meant she was able to move into her ideal home sooner than she had imagined possible.

Originally from Holmer Green in High Wycombe, Victoria chose to purchase in Fairford Leys as she felt the quality of properties on offer far exceeded anything she had seen elsewhere.

Fairford Leys is contained within gated walls and includes amenities such as a health and fitness centre with swimming pool, Chinese takeaway, supermarket, bar and hairdresser; perfect for a busy young career woman such as Victoria.

“It’s fantastic having everything I need on the doorstep and I’ve already had a guided tour of the gym which I intend making full use of. There’s a good mix of young couples and families here and it really feels like joining your own little community” she says.

Minutes away from Aylesbury town centre, an hour from London by rail, and within easy reach of the M25, M40 and M1 motorways, Waterford Gate is ideally located for commuters like Victoria, who works as an Account Development Manager for vehicle leasing company LeasePlan UK. She regularly commutes to her clients’ offices in the north of England and to her head office in Slough, and spends the remaining time working from home.

“I am thoroughly enjoying living in Waterford Gate and even though moving house is supposed to be one of the most stressful experiences in life I have found the whole experience exciting and painless thanks to the sales staff who have been very supportive throughout the entire process.

“As my apartment wasn’t ready when I reserved it in mid-March I was a little nervous about purchasing off-plan. However, the sales negotiators really helped by talking me through the plans and helping me visualize my new home in relation to the show apartment.

“As a first time buyer I had so many questions and it was great having people to turn to every step of the way. Since moving into my new home in June I haven’t looked back; being a homeowner is a fantastic feeling and as I have friends in the area I know I am going to be very happy here.”

Prices at Waterford Gate start from £146,000 for a one-bedroom apartment, and from £160,000 for a 2 bed apartment with en-suite & secured allocated underground parking. The on-site sales centre is open 7 days a week between 10am and 5pm. Telephone 01296 394758 for further information or visit www.bellway.co.uk.


First time buyers helped onto the property ladder at Woolwich Green

It has been reported that houses prices are set to rocket over the next six years in a boom that will see the average cost of a home top £300,000 nationwide.¹ While owners are standing back and watching as the biggest investment of their lives soars in value, first time buyers are going to find it harder and harder to get onto the property ladder.

In an attempt to help combat the first time buyer crisis, Countryside Properties has launched a ‘Grand Idea’ scheme for first time buyers at Woolwich Green, its development in Shooters Hill, South East London  This new set of incentives has been specifically tailored for first time buyers and enables potential purchasers to reserve and move into a new home at Woolwich Green for just the cost of their reservation fee - £1,000.  

Already over 60% of the buyers at Woolwich Green are first time buyers, including 26-year-old Julie Turner.  

Julie, who is an HR Administrator and works in Fenchurch Street in the City, is now the owner of a new one bedroom apartment thanks to the ‘Grand Idea’ scheme.

She says: “I have wanted to buy my first home for a long time and I have lived at home with my parents for the last five years to save money for a deposit.  Even having done this though, taking the first step onto the property ladder has been expensive, but the help from Countryside Properties has been fantastic and has made it affordable for me.”

Julie will commute each day from Shooters Hill to the City, a journey that she is anticipating to take around just 40 minutes thanks to good transport links from the development.  

She says: “Woolwich Green is just a short bus ride away from North Greenwich station which then offers really fast services into central London on the Jubilee line, so I have an easy journey to work each day.  I think that this combined with some lovely finishing touches such as my contemporary fully fitted kitchen, lovely bathroom with power shower and secure underground car parking makes my new apartment the perfect first home!”

Ian Hepworth, Sales Director for Countryside Properties, says: “We are delighted that we are helping first time buyers like Julie onto the property ladder.  House values are set to increase annually by around £20,000 from this year according to the National Housing Federation, and in 2012 the average home is likely to cost almost 10 times the predicted average salary.  I think first time buyers need all the help that they can get!”

Comprising 141 one and two bedroom apartments, current prices at Woolwich Green start from £170,000 for a one bedroom apartment and just £199,950 for a two bedroom, two bathroom apartment.  

Woolwich Green is set within a conservation area bordering Woolwich Common of Shooters Hill road in South East London and comprises three main residential apartment buildings nestled within landscaped grounds and set around two communal gardens.

The striking architecture combines traditional warm red brick work with white render and steel detailing.  There is extensive use of glazing to retain natural light throughout the apartments, and to create a bright and airy environment.  Many apartments have amazing views over London, Canary Wharf and Woolwich Common and all have the benefit of balconies.  
The apartments range in size from 462 sq. ft to over 700 sq. ft and each is finished to a very high standard and has a stylish and modern specification.  

Kitchens combine warm cinnamon ash and feature panelling with laminate worktops and stainless steel appliances.  Bathrooms are coolly elegant with white ceramic surfaces.  Secure underground car parking is also available at an additional cost.  

Woolwich Green is set amongst over 200 acres of green space, yet the buzz and attractions of neighbouring Greenwich and Blackheath are just a short ride away and provide a variety of cultural and historical landmarks such as the Cutty Sark, The Royal Observatory and the former Millennium Dome, as well as a sophisticated cache of restaurants, bars, pavement cafes, boutiques and markets.  

A well-constructed conservatory adds value. Here Everest, a leading home improvement company, along with glass manufacturer Pilkington, spells out the steps to a successful addition

A conservatory is one of the easiest ways to extend living space and increase the value of a home. If done with forethought and planning, it can provide a bright new room at a reasonable cost, and the right materials can help minimise upkeep.
Escalating property prices and the rising cost of actually moving (approximately £20,000 including agents and solicitors fees and stamp duty) have encouraged many people to extend current homes rather than climb the property ladder. Then, when it does come time to sell, the desirability to buyers – and the asking price – will be improved by having created a well-thought-out extension.
 
Planning

Many conservatories can be built without planning permission, but don’t take a chance. Local authorities will be able to confirm whether or not permission is needed. Those who extend without checking on whether planning permission is needed run the risk of a lot of expense and hassle; the local authority can order the structure to be removed.
Once you are sure a conservatory is permitted, be clear about what the room will be used for – playroom, dining room, relaxation area etc - and make sure the end result fulfils this need. Thorough research should be done into different styles and layouts. To help add maximum value to the property, be attuned to the surroundings - it is important that the style of conservatory fits in with the rest of the home and garden.
Ensure that the conservatory comes with an unconditional ten-year guarantee - all Everest conservatories, which have obtained seven ‘Kitemarks’ and three registrations from the British Standards Authority, come with this as standard. And when obtaining quotes for conservatories, make sure to get it in writing and always ask whether the cost includes VAT and installation fees.
 
Window of opportunity

Glass is obviously a major feature of any conservatory. It can be very time-consuming to keep the panes of glass clean, and if a window cleaner is regularly paid to do it the financial costs quickly mount up. All conservatory roofs need regular cleaning and can be difficult to reach from a standard step-ladder or upstairs window. An environmentally friendly way to keep windows sparkling is Pilkington Activ self-cleaning glass, which works with the weather to keep itself clean.
Pilkington Activ has a dual-action coating that first reacts with UV rays to break down organic dirt (for example, fingerprints, bird droppings, tree resin) and then encourages rainwater flow down the glass in an even ‘sheeting’ effect, preventing rain droplets forming and washing away any remaining dirt. This sheeting action prevents water from drying in streaks and smears following a rain shower; it also means that there is a clear view through the window even in the heaviest downpour.
Don’t be tempted to cut corners and install a polycarbonate roof. It can discolour very quickly, totally ruining the overall look of your conservatory. It also provides limited sound insulation so even the lightest of showers can sound like a torrential downpour. Finally, polycarbonate offers limited temperature control so the conservatory could be cold in the winter and hot in the summer, making year-round use unlikely.
 
A room for all seasons

And speaking of year-round enjoyment, a new breakthrough from Pilkington helps moderate the temperature of a conservatory, thus making it possible to spend time in your extension however high the mercury rises. The recently launched Pilkington Activ Blue, specifically designed for conservatories, is an attractive blue glass that combines dual-action self-cleaning properties with solar control technology to prevent conservatories getting unbearably hot in the summer.
The glass had a faint blue tinge which allows considerably less heat into the room compared to standard glass. In fact it reduces heat transference into the conservatory by approximately 43 per cent. This is because the blue tint absorbs the heat and aims it back outside, helping to keep the interior cooler, with sufficient ventilation, removing the need to install interior blinds , which can cost £1,000 or so. The attractive blue colour also has an aesthetic benefit as it reduces reflection, giving uninterrupted exterior views.
Double glazing can help maintain temperatures by providing insulation in the winter, and in these days of increased awareness of green issues, it is important to remember that the reduction of heat emissions can also help protect the environment. Any double glazing should always be safety glass, toughened or laminated and marked with a Kitemark stamp proving it complies with British or European standards.
 
On the floor

The floor of a conservatory should be quite hardwearing and suitable for outdoor shoes that might be carrying mud etc in from the garden. Flagstones and tiles are perfect for this, but lino or laminate flooring can also be an option; the latter is good for providing continuity from a kitchen area. Under-floor heating is a great way to warm up the conservatory in winter months.
Further information on Everest conservatories can be found on at everest.co.uk. For more information on Pilkington Activ ring 01744 692000 or see pilkington.com/selfcleaningglass

Buying a property to let continues to be an extremely popular way of investing. Johnny Turner looks at the market and what’s available to buy

For the past five years or so, the buzz in the property market has been about buying to let. While not a guaranteed route to riches, putting money into property rather than more traditional vehicles such as shares has become a way of life for Britons.
Imagine Homes – A REVOLUTIONARY WAY to invest in property
 
If you’ve ever considered investing in property but the risk and effort involved has put you off, then it’s time to consider Imagine Homes – a pioneering new way for you to build an investment property portfolio.
 
Imagine Homes has revolutionised the investment property market by making it possible for you to buy a brand new property off plan with a two year rental income guaranteed. In other words you ‘buy already let’.  Investors will be guaranteed two years rental income at 15% of the purchase price - you will get a cash lump sum equal to 7.5% of your property paid to you annually, upfront over the two year period.
 
Investors will choose their property from Imagine Home’s large portfolio, safe in the knowledge that Imagine Homes only selects first class properties from the best developments. Imagine Homes currently has properties for sale and to rent throughout the country in locations such as London, Manchester, Liverpool and Bristol. Investing in property through Imagine Homes also frees you of all the risks and stress usually associated with renting out property; they do all the legwork for you, from finding a suitable tenant to furnishing and managing the property.
 
Grant Bovey, founder and CEO of Imagine Homes, said: “Many people assume that the Imagine Homes concept is too good to be true, but this is simply not the case. We are there to take the pain and effort out of investing in property and to ensure that all investors get the best possible chance for capital growth. By offering a guaranteed two years rental income at 15% of the purchase price, we make the ‘buy to let’ sector an attractive investment option”. 
 
For two years, investors need not have any involvement with the property and then at the end of that two year rental period they have the option of making the following choices:
·    Inherit the tenant
·    Rent it out
·    Move in
·    Sell
 
For further information on Imagine Homes and their portfolio of properties simply log onto www.imaginehomes.co.uk
Imagine Homes, the company that has revolutionised the buy-to-let sector, is set to open Europe’s first retail experience that will showcase the future of property portfolio management. Imagine Homes has changed the way people invest in property and the new development will now bring this whole experience to life.  
 
Located on the Hogarth Roundabout, the ambitious new venture will encapsulate Imagine Homes’ unique buy already let offering across a 17,000 sq ft, two-storey state of the art centre. This multi-million pound investment has allowed Imagine Homes to create the ultimate environment to consider property investment options.  
 
Investors will be presented with a vision of the Imagine Homes proposition through a high tech audio visual theatre. The company’s county-wide portfolio of luxury properties will be delivered on a series of plasma screens, all at the touch of a button. Investors won’t need to visit their proposed purchase site; a virtual tour of all properties means they can sample every specification from the comfort of this facility.
 
A fully dedicated sales team will also be based on site and will be available to answer any questions investors may have. Further facilities on the ground floor include a relaxing café/ bar and a crèche with fully trained staff where parents can be confident in leaving children whilst they take in everything Imagine Homes has to offer. Executive offices, meeting rooms and a creative presentation zone will be housed on the first floor.
 
This ground-breaking development is situated at one of London’s most sought-after sites with its location on the A4 ensuring passing traffic around the clock. Work has already begun on implementing Imagine Homes’ vision, with doors set to open in the autumn of 2006.
 
Grant Bovey, founder and CEO of Imagine Homes, commented: “Since I launched Imagine Homes, the company has re-written the rules of property investment and made it easier than ever to build a portfolio.”
 
“The next step in our evolution was to create a space that allows investors to have a glimpse of a hassle-free and profitable future by building their property wealth. As a company we are pushing the boundaries in our field and we now believe we have the ideal space to share the vision with an even broader audience.”
 
Neil Christy, Creative Director and designer of Terminal 5 at Heathrow Airport added “I am delighted to be working on this unique project for Imagine Homes.  This development represents a major innovation in this sector.  It brings together a range of state of the art technologies which showcases property investment at its highest level.” 
 
All of the properties in Imagine Homes’ portfolio of high quality developments are in well chosen locations, with good travel links and excellent potential for capital growth. Investors will receive a guaranteed rental income of 15% of the purchase price, for the first 2 years annually in advance.  What’s more Imagine Homes invest up to 20% in each of their developments for their own property portfolio – something that should give customers significant reassurance when looking to invest in the buy to let market for long term capital growth.
 
 
For further information on Imagine Homes and their portfolio of properties simply log onto www.imaginehomes.co.uk
 

David Whittaker of Mortgages for Business looks at how the investment market has changed
A decade ago the buy-to-let investment concept was developed by Andrew Reeves of the Association of Residential Letting Agents (ARLA) along with a group of eight mortgage lenders.
Residential property investment prior to this point was largely the realm of professional landlords and was carried out under complex commercial terms. Today, the majority of banks and building societies are involved in the buy-to-let market under various brands and buy-to-let represents eight per cent of all UK mortgage transactions.

Amateur investors surged to the market in the early years of this decade as house prices enjoyed consistently strong double-digit growth each year. The fortunes of the buy-to-let market in the past two years have been more patchy: amateur activity has dwindled, although signs in recent months are beginning to suggest that smaller investors are beginning to return to the market.

Despite the hype surrounding buy-to-let investment, the amateur investor is still very much in the market’s passenger seat. According to 2006 Council of Mortgage Lenders statistics the large-portfolio landlord remains dominant. Thirteen per cent of landlords own 74 per cent of the buy-to-let stock and – perhaps more striking - 53 per cent of landlords own a mere three per cent of the stock. So despite the growing number of people active in the buy-to-let market, and despite the cultural changes this development has ushered in, amateur investment impact remains relatively small.

Lending on new build properties is now subject to tighter lending criteria and increased scrutiny, with some lenders exiting the new build buy-to-let market altogether this year. Many lenders now require a 25 per cent to 30 per cent deposit compared to just 15 per cent in the final quarter of 2005.

New build properties, particularly in city centres, are showing signs of oversupply and assessing the true market value is difficult. If a lender overvalues a property, then in proportion they could lend the borrower too much money in relation to the true property value.
The affect of the Housing Act on houses of multiple occupancy which came into force in April this year still remains to be seen. There is still a great deal of confusion among individual councils about which properties need a licence, so the first prosecutions under the act are liable to happen in the next six months.

The dynamics of the market have changed significantly with increasing competition between lenders offering more keenly priced products. Ten years ago buy-to-let was the territory of a few specialist lenders who priced on commercial property terms, resulting in high mortgage rates and the need for a 30 per cent deposit!

As the market has matured, terms have changed. More and more lenders have entered the market, increasing the pool of money being advanced and thus competition.
Loan-to-value (LTV) ratios - the amount a lender is prepared to forward as a percentage of a property’s value - have risen in incremental five per cent shifts up to the current market norm of 85 per cent. In recent weeks selected lenders have raised the bar higher and are beginning to offer 90 per cent LTV for investors willing to match higher fees and increased lending margin requirements for borrowing at this level.

The property market is likely to continue to favour the investor as competition intensifies and lenders continue to find ways to differentiate themselves.
It seems plausible that given the short history of the market, 90 per cent LTV will become the new market norm. Investors can expect more finely priced products to become available and especially at lower loan-to-values, although investors should also expect fees to remain higher than residential mortgages.

David Whittaker is managing director of Mortgages for Business, a company that has been at the forefront of the buy-to-let mortgage sector since the market inception ten years ago. Call 0845 345 6788 or visit mortgagesforbusiness.co.uk.

House price growth picks up

House prices rose by 0.8 per cent in July following three months of broadly flat growth, according to Nationwide Building Society. The annual rate of growth is currently 5.9 per cent, which is more than twice that seen this time last year.
The average house in the UK costs £167,733, which is £9,385 more than at the same time last year.
Fionnuala Earley, Nationwide group economist, says the market looks healthy. ‘Indicators of market activity suggest that housing market demand remains fairly buoyant. This will help to support prices, at least in the short term.’

David Newnes, managing director of Your Move Estate Agents, said, ‘First-time buyers have been struggling to get on the property ladder before today’s announcement. The 0.25 per cent increase will put some potential buyers off making their purchasing decision, not just because of this rise which in real terms is quite small, but because any rate rise knocks confidence.’
‘The market over the last six months has been healthy and steady; this week’s rate hike is totally unnecessary. There is now a risk of the housing market slowing down, which is surely not what the Bank of England intended. The reality is that property remains a very good long term investment and we need first time buyers to be able to come to the market with confidence, not worried about what will happen round the corner to interest rates."

More pay inheritance tax

More of us are liable for inheritance tax, according to research by Halifax. The study, based on data from HM Revenue & Customs, shows the number of estates paying inheritance tax rose by 72 per cent to 30,451 over the five years to 2003/04.
Peter Bolton King, chief executive of the National Association of Estate Agents (NAEA), says, ‘The NAEA has been campaigning for years for an increase in inheritance tax thresholds.’ Inheritance tax, he says, has failed to keep up with the large increases in the average property values in recent years. ‘[It] has morphed into an unfair tax on the thousands of people who inherit properties worth a modest amount. It is truly shocking that the majority of estates that have paid inheritance tax over the past few years were valued at less than £500,000. It's high time the government started playing fair and brought the inheritance tax threshold in line with inflation.’

Modern science has come up with a brand new way for vendors and agents to advertise properties to passers-by – a patented new type of sign that avoids many of the problems associated with the traditional ‘for sale’ boards.
The new Snap Salers are ‘for sale’ signs made from a flexible, perforated and washable material which are easily placed in a window using suction pads and are completely visible from the outside while still allowing light in. Traditional boards, while still necessary in some places, are expensive and time consuming to install and remove, less attractive, prone to vandalism and graffiti and vulnerable to the elements.
Parkheath Estates has beaten off stiff competition to become the first agent to market its properties with Snap Salers. Claire Sherman of Parkheath’s marketing department says, ‘Ours is a very competitive market and the new signs give us a real head start on the opposition, especially in the fast moving rentals market.’

What’s ahead

June's strong lending figures point to a robust current market, says Howard Archer of Global Insight. 'This suggests that house prices may well spike higher in the near term at least,' he says, 'after showing some recent signs of losing momentum.
Archer predicts that the current shortage of properties in some areas may also boost prices. 'This is particularly true of London and the South East, which are currently showing the strongest increases in house prices by a significant margin. Indeed, most other areas are currently seeing much more limited house price rises.'
'We continue to believe that house prices will eventually settle down into an extended period of relatively modest rises, allowing for monthly fluctuations around this trend,' he concludes. 'Despite high employment and a modestly improving economy, we suspect that buyer activity will be increasingly squeezed over the coming months if house prices move up significantly, and that this in turn will cap prices.'

How high is too high?

Meanwhile, an audacious prediction from the Oxford Economic Forecast (OEF): a report says the average house price in the UK will rise by over 50 per cent in the next six years, to over £300,000. OEF claims that by the year 2012 the average house will cost the equivalent of nine and a half times the average annual salary.
However, Halifax economist Martin Ellis disputes this forecast: 'It is a big increase, and certainly higher than the increase we would be expecting over the next few years. I don't think it is a likely figure at all; I think it's far too high.'
A more settled housing market is likely in the next five years, he says.'
Mortgage lending up again
The number of mortgage approvals hit a high last month, taking home loan activity to its highest level so far this year. In its report on lending to consumer, the Bank of England said the number of mortgages approved but not yet granted rose to 120,000, substantially higher than the 116,000 average for the previous five months.
This follows a similar finding from the British Bankers' Association last week. Meanwhile, Home track said house prices were rising at their highest rate for nearly two years and a RICS survey showed a six-year high in the pace of house price rises.

Mis-selling costs lenders

The Financial Services Authority (FSA) last week revealed that the cost of claims related to the mis-selling of endowment mortgages has doubled to £2.2 billion in little over a year. This comes hot on the heels of news that Bradford & Bingley has set aside a further £89.4 million to cover potential endowment claims, in addition to the £75.8 million already booked by the bank since 2004.
Tim Moore of EndowmentClaims.com says, 'Far from commiserating with the likes of Bradford and Bingley that endowment payouts are eating into profits, it is my opinion that insurers are getting off lightly. The FSA estimates that around 2.2 million home owners could have a valid mis-selling claim, which adds up to a potentially staggering compensation sum.
Moore believes the insurance industry is using unfair tactics to keep further victims of mis-selling from claiming. 'The industry has propagated a campaign of confusion and misinformation to dissuade endowment mortgage holders from seeking rightful recompense for mis-sold policies. This includes implementing potentially flawed time bars that stop people pursuing a claim after a certain date.'

Co-buying is the way forward in these days of high property prices. We get tips on this increasingly popular buying method

Four rules for co-buyers

Take your time It is important that you get along with your co-buying partner(s) both on a personal and business/property level. So be patient – you may have to kiss a few frogs.
Keep perspective Focus on what you’re trying to achieve. For first-time buyers this is a stepping stone, not the house you will live in for the next 20 years, so be prepared to compromise – it’s the basis of every lasting relationship.
Protect yourself Get all the legal side well covered and agree a set of terms you will live by – literally!
Be honest Be open with your co-buying buddies and you should get on fine.

As the first rung of the property ladder gets harder to reach, would-be buyers are having to find new ways of gaining access to the marketplace. In recent years we have heard of people buying with family or friends, but that isn’t always possible.
For one Londoner who was finding it difficult to get on to the property ladder, an inventive strategy for becoming a property owner has developed into a business.
Theo Michaels, 29, founded Co-BuyWithMe.co.uk out of his need to find someone with whom to share the cost of buying a property. The website guides prospective co-buyers through the process, helping the buyers be clear about their own objectives and matching them with others with complementary goals.
Michaels’ successful experience in the property market has prompted him to share his wisdom with those who are unsure of the best way to proceed. He offers these answers to frequently asked questions about co-buying.

What is co-buying?

It is when a group of two or more people join forces to buy a property together. Come co-buyers do it because they cannot afford to buy their first home alone, others want to co-buy with an investor to get into the buy-to-let market, and other co-buyers want the pleasures of a holiday home without the massive cost!
 
So why did you co-buy?

I was one of the thousands of first-time buyers who simply could not afford to get on the property ladder on my own. After looking into a mortgage and seeing how high London property prices were, I knew the only option I had was to co-buy which meant we had a bigger deposit, larger mortgage and split all the costs.
 
Did you know your co-buyers?

Not originally. I put the word out with friends, family, colleagues and eventually got introduced to my co-buying buddies through mutual friends. We all met up a few times to get to know each other (i.e. went drinking!) and then spent some sober time working out what we all wanted from our co-buying experience and what terms we would agree to.
 
What were your aims as a group?

We all wanted to co-buy as a stepping stone to get on the property ladder so we agreed on the following (although different situations call for different terms):
 
·    to stay in the property for two years minimum; if anyone wanted out before the two-year period they had to find another co-buyer or carry on paying their share until the two-year period is up
·    if after two years anyone wanted their money out, we would sell the property and not restrict anyone, unless they could find someone to buy them out.
·    all costs to be split equally
·    be as flexible as possible with each other
 
This all sounds good but isn't it risky buying with strangers?

It's only risky if you don't protect yourself. There are several things you can do to protect yourself and your investment, including: draw up a Declaration of Trust, a legal document which states the terms and says we are all legally responsible for our share of the mortgage
get payment protection on the mortgage in case someone was out of work; at least that would ensure their share of the mortgage was paid.
each draw up a will to protect our asset should anything terrible happen to us

Do you still live with them now?

Actually, yes! We have just come up to our two-year period and are going to remortgage our co-bought property to take some money out and use that as a deposit to buy on our own! Co-buying was a perfect stepping stone and luckily we are able to keep our current house and rent it out - not to mention the holiday home I and some others co-bought.
We may have started off as strangers but we're definitely friends now!

What holiday home?

After the success of my first co-buying experience, a friend and I wanted to buy a holiday home in a ski resort, but found that it would stretch us financially. We realised we needed other co-buyers to make it viable. Eventually there were six of us that co-bought it (two of them I've never even met!) and it has worked out great - we'll be off snowboarding by March 07!

What if I don't know anyone to co-buy with - where can I find other co-buyers?
I thought you'd never ask! After my experience I created a free website for co-buyers to find & contact other co-buyers, plus we have some great co-buying information including a co-buying guide and case-studies from first-time and overseas co-buyers, as well as investor co-buyers who want to get involved in buy-to-let market.

Visit Co-BuyWithMe.co.uk

As more buyers enter into shared ownership agreements

House prices have trebled since 1995, whilst average incomes have only increased by 50%[1] making it even harder for first time buyers to get on the first step of the property ladder. In addition up to 10% of first time buyers are choosing to club together with a friend[2], Equifax, the instant online credit information provider is therefore advising home buyers to be aware of some possible pitfalls of a joint mortgage agreement.

Buying with a friend could mean getting on the property ladder sooner, getting a bigger home or moving to a better location.  However, whilst statistics from a recent Equifax survey reveal that 83% of young people are planning to make a major purchase over the next six months, worryingly 23% of young people under 25 already have up to £10,000 of long term debt to pay off, which may lead to possible problems if money runs dry. Mortgage providers will hold home buyers jointly responsible for repayments so if a housemate can’t or won’t continue repayments those left behind will be expected to keep up the payments alone.

On a more positive note the Equifax survey also reveals that 82% of home buyers will obtain a copy of their credit file before making the purchase.  “This is good to know” confirmed Neil Munroe, External Affairs Director, Equifax.  “However I would also urge buyers to ensure they take steps to improving their credit file before making a major purchase. And of course there is no guarantee that things won’t go wrong when people buy a home together.  But there are steps buyers can take to avoid any potential problems.

“I would advise consumers to have an open relationship with their buying partner and to be upfront about any existing credit agreements or debt”.

“If a friend isn’t prepared to share information about their financial status buyers may need to be cautious of entering into a financial agreement of that significance. Perhaps they are hiding unpaid loans or other financial problems which can affect the mortgage rate buyers receive. An open relationship will also let the buyer know if their friend will be financially stable and reliable”.

Richard Cohn founder of SharedSpaces.co.uk a website that helps aspiring property buyers to find potential partners agrees: “I highly recommend potential house mates being open and honest about their financial status.  Co-buying is a great way of affording to buy years sooner than you could do alone, but whether you are buying with a friend, a family member or someone you meet through our co-buyer network, I would urge people who decide to buy together to have a Deed of Trust drawn up by a solicitor, setting out the rights and responsibilities of both parties involved and in particular what should happen when one of you decides to move on”.

Equifax advises anyone who is going to enter into a mortgage agreement to check their credit rating to ensure they can get the best mortgage deal on the market. The Equifax credit rating can be obtained instantly at www.equifax.co.uk.

If you would like more information or would like to arrange an interview please contact Cecile Stearn, Claire Foster, Kate Clements, Elinor Puzey or Wendy Harrison at HSL on 020 8977 9132 or email cecile@harrisonsadler.com

About Equifax (www.equifax.com)

Equifax Inc. is a global leader in information technology that enables and secures global commerce with consumers and businesses. We are one of the largest sources of consumer and commercial data. Utilizing our databases, advanced analytics and proprietary enabling technology, we provide real-time answers for our customers. This innovative ability to transform information into intelligence is valued by customers across a wide range of industries and markets. Headquartered in Atlanta, Georgia, Equifax employs approximately 4,600 people in 13 countries throughout North America, Latin America and Europe. Equifax was founded 107 years ago, and today is a member of Standard & Poor’s (S&P) 500® Index. Our common stock is traded on the New York Stock Exchange under the symbol EFX